US STOCKS-S&P 500 ends up slightly as tech dips, inflation cools

By Sinéad Carew and Twesha Dikshit

Feb 13 (Reuters) - The S&P 500 closed barely higher on Friday, supported by cooling inflation data, but the Nasdaq ended lower as heavyweight technology and communications services shares lost ground on nagging fears of disruption by artificial intelligence.

The S&P 500, the Nasdaq and the Dow all declined for the week with technology stocks on a roller-coaster ride due to uncertainty about the extent to which profits could be disrupted due to AI competition and the hefty spending needed to support the technology.

Equities had started the session strong after data showed U.S. consumer prices increased less than expected in January. This prompted traders to slightly raise the chance of a 25 basis point interest-rate cut in June to 52.3% from 48.9%, according to the CME Group's FedWatch tool.

But heavyweight technology .SPLRCT and communications services .SPLRCL ended the session lower as investors were jittery ahead of Monday's U.S. holiday for Presidents Day.

"Large cap tech stocks continue to be an anchor on the market and any whiff of optimism continues to get rejected," said Michael James, managing director, at Rosenblatt Securities, Los Angeles.

"We've been on wobbly legs a couple of weeks now and with the three-day weekend approaching, it's not surprising to roll over into the end of the day."

The Dow Jones Industrial Average .DJI rose 48.95 points, or 0.10%, to 49,500.93, the S&P 500 .SPX gained 3.41 points, or 0.05%, to 6,836.17 and the Nasdaq Composite .IXIC lost 50.48 points, or 0.22%, to 22,546.67.

For the week, the S&P 500 fell 1.39%, the Nasdaq declined 2.1%, and the Dow fell 1.23% for their biggest weekly losses since November.

Equity markets have pulled back from record levels recently as AI fears fueled worries in sectors spanning from software and insurance to trucking companies. However, the S&P 500 software and services index .SPLRCIS closed up 0.9% on Friday while the S&P 500 tech sector .SPLRCT fell 0.5%.

Despite improving inflation trends, Phil Orlando, chief market strategist at Federated Hermes, predicted more choppy trading ahead as investors deal with the looming U.S. midterm elections in November and the expected replacement of Fed Chair Jerome Powell by Kevin Warsh in May.

Historically when a Fed leadership transition happens in a midterm year, the market has hit a "double-digit air-pocket every time that's occurred," Orlando said.

Megacap tech stocks were weak with Nvidia NVDA.O and Apple Inc AAPL.O providing the biggest drags to the S&P 500 while Applied Materials AMAT.O provided the strongest boost.

Defensive utilities .SPLRCU ended up 2.69% and real estate .SPLRCR added 1.48%, making them the top gainers among S&P 500's 11 major industry indexes.

Healthcare .SPXHC was also a boost with Dexcom DXCM.O rising 7.6% and Moderna MRNA.O rising 5.3% after both companies' fourth-quarter earnings reports impressed.

Applied Materials shares jumped 8.1% after the chipmaking-equipment firm forecast second-quarter revenue and profit above Wall Street expectations.

Networking equipment provider Arista Networks ANET.N gained 4.8% during the session after forecasting annual revenue above expectations.

White House trade adviser Peter Navarro said there was no basis to reports that the administration was planning to reduce steel and aluminum tariffs.

Still, some steelmakers came under pressure with Nucor NUE.N falling just under 3% and Steel Dynamics STLD.O slipping 3.9%. Also aluminum producer Alcoa AA.N fell 0.9% while Century Aluminum CENX.O shares tumbled 7.4%.

Advancing issues outnumbered decliners by a 2.57-to-1 ratio on the NYSE where there were 392 new highs and 93 new lows. On the Nasdaq, 3,156 stocks rose and 1,646 fell as advancing issues outnumbered decliners by a 1.92-to-1 ratio.

The S&P 500 posted 34 new 52-week highs and 6 new lows.

On U.S. exchanges 18.61 billion shares changed hands compared with the 20.75 billion moving average for the last 20 sessions.